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July 13, 2012

NASSAU COUNTY ENDS FISCAL YEAR 2011 WITH AN UNAUDITED DEFICIT OF $50.4 MILLION DUE TO FAILURE BY NIFA AND LEGISLATIVE MINORITY TO APPROVE $43.1M IN BONDING

Immediate Actions are Required to Avoid a 2012 Deficit

 

Nassau County Comptroller George Maragos announced that the County will end fiscal year 2011 with an unaudited budgetary deficit of $50.4 million. The audited results will be finalized by July 30th. The delay was necessary due to the need to confirm the County’s Other Post-employment Benefits liability. Comptroller Maragos further indicated that a deficit of approximately $45 million is projected for year-end fiscal 2012 unless immediate steps are taken to end in balance. County Executive Mangano is expected to release a revised financial plan next week.

"The deficit in 2011 was avoidable and is primarily the result of NIFA and the Legislative Minority failing to work with the Administration to approve $43.1 million in bonding for property tax refunds,” Comptroller Maragos said.  “Similarly, the projected $45 million deficit in 2012 is partially the result of the anticipated failure of NIFA and the Legislative Minority to again approve the 2012 budgeted bonding for tax refunds. This ongoing lack of cooperation will continue to negatively affect the County.”

For the first year since NIFA was created, it has required that the County also report its year-end financial results on a NIFA-modified Generally Accepted Accounting Principles (GAAP) in addition to the usual budgetary and structural gap bases. The GAAP results (with NIFA-defined adjustments) equate to a negative $173.4 million for fiscal year 2011. NIFA’s GAAP presentation excludes other financing sources and uses of certain revenues and expenditures. Under a similar GAAP presentation, the 2010 and 2009 County financial results were negative $173.0 million and $184.3 million, respectively. Based on the preliminary mid-year financial projections for 2012, the GAAP results (with NIFA-defined adjustments) are expected to be negative $143.7 million, a 22% improvement over 2009.

The 2011 Structural Gap has continued to improve for the second consecutive year by approximately 7.3% to $127.6 million, down from $137.6 million in 2010. Additionally, the amount of general borrowings during 2011 was reduced by approximately 75% from $324 million in 2009 to $82 million in 2011.

Comptroller Maragos further stated that, “It would be prudent for the Administration to assume that cooperation from NIFA and the Legislative Minority will not occur and bonding to pay property tax refunds will not be approved in 2012. I urge County Executive Mangano to take immediate steps to cut costs and raise non-tax revenues in order to end 2012, not only in balance, but with a surplus in order to replenish the County’s fund balance.”

Comptroller Maragos continued, “Ending 2012 with a surplus, without any borrowing to pay for property tax refunds, would be a major accomplishment, and finally restore the County to fiscal health by bringing operating revenues approximately in line with expenses while also protecting our hard pressed taxpayers.”

Comptroller Maragos recommends that the Administration target $90 million in actions to achieve a budgetary surplus in 2012 and restore the unreserved fund balance back to 2010 levels. These actions should aim to: (i.) refocus government on core functions; (ii.) in-source where possible, services performed by contractors; (iii.) cancel all non-essential contractual services and maintenance contracts; and (iv.) halt all non-essential general expense purchases.

See attached report for the details on the 2011 unaudited results and the preliminary 2012 fiscal year projections.

PDF File Unaudited 2011 Year-End Financial Summary and Mid-Year Fiscal 2012 Projections